Subcontractor Insurance

A bona fide subcontractor is a genuinely independent business: they carry their own public liability and employers' liability, they provide their own materials and plant, they work to their own method rather than under your direct supervision, and they could send a different person tomorrow.

A labour only subcontractor supplies labour and little else. They work under your direction, usually with your materials and often your tools, and in practice they are an extra pair of hands who happens to invoice rather than being paid through payroll. For insurance purposes they are treated as your employee: your employers' liability answers an injury to them, and their payments are rated as wageroll.

The test is the reality of the arrangement rather than what the paperwork calls it. A self-employed bricklayer invoicing weekly, using your mixer, working where you tell him, is labour only whatever the invoice says. That is not a trap so much as a definition, and declaring it accurately is cheaper than the alternative because an understated wageroll discovered at claim stage is a far worse position than a slightly higher premium.

Hold your own cover, at the limit the site requires, and do not accept reassurance that you are covered under somebody else's policy.

Expect to produce three things before you get on site: a public liability certificate at the required limit, usually £5 million and sometimes £10 million, employers' liability if you have anyone working for you, and indemnity to principals naming the client or main contractor. Get the certificate dated to run past the end of your programme rather than just past the start, because a renewal falling mid-contract is a common and entirely avoidable hold-up.

Read the subcontract before signing. Two clauses matter more than the rest: whether the works risk sits with you, which determines whether you need contract works, and whether design responsibility has been passed down, which determines whether you need professional indemnity. Both are negotiable before signature and neither is afterwards.

The job is to categorise each one correctly and then collect the evidence, and the second part is where most firms slip.

For every bona fide subcontractor, take a copy of their public liability and employers' liability certificates, note the expiry dates, and check them against your programme. For labour only, declare the payments as wageroll at renewal. Keep both records somewhere you can produce them, because at renewal your insurer will ask, and after a claim they will ask harder.

Your own policy will normally extend to subcontractors working for you, which protects you against the claim. The problem arises when a bona fide subcontractor turns out to have had no cover, or cover that lapsed, because then there is nobody for your insurer to recover from and the loss settles with you. One expired certificate is how a manageable claim becomes your claims record.

On any site of size, insurance is checked before access rather than after an incident, and the checks have become more thorough.

Expect the certificate to be read rather than filed: the limit, the trade description, the expiry date, whether indemnity to principals is shown, and whether the named insured matches the company on the subcontract. A certificate in a trading name that does not match the contracting entity is a routine reason for being turned away, and it is entirely avoidable.

Where the contract attaches a liquidated damages or hold harmless clause, that is a document question rather than an insurance one, and it is worth having read before you sign. Amendments at that stage are ordinary and routinely accepted. A signed obligation your policy will not stand behind is not something you can unwind afterwards.

Almost every trades insurer writes subcontractors, which makes the quotes look alike and pushes the differences into how your people are categorised. We are an FCA regulated broker and will not tell you we are the best choice. These are the questions that decide it.